Legal Question in Business Law in Iowa

governing state issue

I have a prospective client that wishes to outsource their overflow of design services to my company.

Our outsourcing/referral agreement states ''This Agreement shall be governed by and construed in accordance with the laws of the State of Iowa. Any action seeking enforcement of this Agreement or any provision hereof shall be brought exclusively in the state or federal courts located in the County of Buchanan, State of Iowa, United States of America. Each party hereby agrees to submit to the jurisdiction of such courts.''

Our client is in Colorado and wishes to have this changed to his County and State before signing the contract.

I'm uncomfortable with changing this, but the possibilities with this prospective client are enormous.

What might the ramifications be if we change this in our contract?

Thanks for your help!


Asked on 1/20/04, 12:09 am

1 Answer from Attorneys
Charles Aspinwall Charles S. Aspinwall, J.D., LLC

Re: governing state issue

The choice of forum when there is a dispute is a negotiable item in contract law. It is an important item, however, as if a dispute arises the forum clause will be enforced and disputes will have to be resolved in the forum selected. In your case this means you will have to travel to CO, register your company as a 'foreign corporation or other business entity' and all proceedings will take place in the county of residence of your customer. This can be a major logistic and economic barrier to the resolution of small disputes, and a major cost when litigating large ones. When you have to go to them, the price goes up.

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Answered on 1/20/04, 8:28 am


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